Steady Power Supply - Will Privatisation Do The Magic - Vanguard News

5/22/2016
Steadypowersupply:Willprivatisationdothemagic?VanguardNews
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Steady power supply: Will privatisation do the magic?

ON JULY 28, 2013 12:14 AM / IN SWEET CRUDE / COMMENTS
7
BY CLIFFORD NDUJIHE
The joint effort of the three tiers of government to increase power
generation, transmission and distribution capacities on a signicant scale
through the National Integrated Power Projects (NIPP) enters its nal
lapse as the government offers the 10 power generating plants built by
the Niger Delta Power Holding Company Limited (NDPHC) for sale to
investors.
Set in motion with the Electric Power Sector Reforms Act of 2005 and the
incorporation of the NDPHC in that year as a limited liability company to
serve as the legal vehicle to build, hold and manage NIPPs assets using
private sector-based global best business practices, the process has
http://www.vanguardngr.com/2013/07/steadypowersupplywillprivatisationdothemagic/
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5/22/2016
delivered 10 new power generating plants as mandated by the Act.

Currently, the NIPP generation portfolio comprises 10 gas-red plants
with a combined design capacity in excess of 5,453 megawatts (mw) at
International Standard Organisation (ISO) conditions and 4,774mw (Net),
all of which are now on offer to private operators for effective
managementvia competitive bids as announced by the government
through the NDPHC in collaboration with the Bureau of Public Enterprises
(BPE).
To handle the sale of the power plants in line with due process and laid
down procedure, the three tiers of government have set up three
committees namely, the Joint Evaluation Committee, whose work is to
evaluate the expression of interest for the power plants; the Joint
Transaction Committee of the NDPHC headed by the Managing Director,
NDPHC, Mr. James Olotu; and the Joint Technical Committee, headed by
Benue State Governor, Gabriel Suswam. A nal approval of what the
three committees would do shall be given by a board of NDPHC and
National Council on Privatisation (NCP).
Towards this all-important last leg of this power reform phase, the
NDPHC, alongside the BPE and other stakeholders in the power sector,
recently launched a road-show in Lagos, which train also moved to
London, Hong Kong (one of the Asian Tigers) and New York, United
States, to provide needed information to potential investors on the 10
power plants.
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5/22/2016
*PHCN transformer
200 investors jostle
The road-show appears to be yielding dividends as about 200 foreign
and indigenous investors are reportedly jostling to buy the NDPHC plants.
Expression of Interest (EoI) for the power plants closed by 5pm on Friday,
July 19, 2013 and 110 private investors companies beat the deadline. The
BPE is expected to announce a shortlist of successful bidders for the
power plants on August 8, 2013. And barring hitches, the power plants
would be transferred to successful bidders between June and July 2014.
Said Olotu: All the plants are in top condition and have gone through
pre-commissioning and reliability tests to ensure optimal performance in
the hands of the operators, who would be selected through a rigorous
process to ensure that the full objectives of the NIPP projects are
realised.
The exercise, he said, would draw lessons from the privatisation of the
Power Holding Company of Nigeria (PHCN) successor companies and
introduce improvement in the auctioning of public sector assets in the
country, adding that President Goodluck Jonathan would soon
commission the comprehensive NIPP projects while Vice President
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5/22/2016
Namadi Sambo, who heads the NCP, lauded the NDPHC management
over the manner it handled the successful completion of the 10 power
plants.
What is on offer?
On the auction block are the 80 per cent shares belonging to the three
tiers of government in the 10 power plants. During the road-show, Mr.
Olotu explained that the three tiers of government have agreed to divest
80 per cent stake in each power plant as valued by our nancial
advisers/valuers. We will retain 20 per cent in order to assure potential
investors of our condence in the plants we are selling.
For the particulars of the facilities on offer, Mr. Olotu said the Alaoji Power
Plant in Aba, Abia State has four gas and two steam turbines with current
capacity of 1,131.4mw (ISO) and 961mw (net). It is designed as a combined
cycle gas turbine (CCGT) facility with duct ring its heat recovery steam
generators (HRSGs). 831.3mw (ISO) and 706mw (net) of the Alaoji Power
Plant are anticipated by its date of sale to private investors.
There is also the Ihovbor Power Plant in Benin City, which has four GE
Frame 9E gas turbines of 507.mw (ISO) and 451mw (net) capacity. It is an
open cycle plant built to accommodate future conversion to combined
CCGT conguration.
Prospective investors can also buy into the 634.5mw (ISO)/562mw (net)
capacity Calabar Power Plant, which is also an open cycle plant built to
accommodate future conversion to combined CCGT conguration. The
Egbema Power Plant near Owerri, Imo State has three GE Frame 9E gas
turbines capable of 380.7mw (ISO) and 338mw (net) power generation
output. It is designed and built to accommodate three additional gas
turbines and future conversion to combined CCGT conguration. Near
Yenegoa, Bayelsa State is the 253.8mw (ISO)/225mw (Net) Gbarain
4/27
5/22/2016
Power Plant. With two GE Frame 9E gas turbines, this open cycle gas
turbine power plant is also built to accommodate future conversion to
CCGT conguration.
Also up for sale is the Geregu II Power Plant at Ajaokuta, Kogi State. An
open cycle gas turbine power plant built to accommodate future
conversion to CCGT conguration, Geregu II has three Siemens V94.2 gas
turbines with 506.1mw (ISO) and 434mw (net) capacity.
The fully operational Sapele II Power Plant is the seventh facility the
NDPHC has put for sale. It has four GE Frame 9E gas turbines of
507.6mw/451mw (net) capacity and is located in Sapele, Delta State.
Investors may also wish to buy into the Olorunsogo II Power Plant in
Olorunsogo, Ogun State, which has 754mw (ISO)/676mw (net) output
capacity, provided by four GE Frame 9E gas turbines and two GE Steam
Turbines.
There is also the Omoku II Power Plant, near Port Harcourt, Rivers State.
Designed and built to accommodate two additional gas turbines and
future conversion to combined CCGT conguration, this plant is powered
by two GE Frame 9E Gas Turbines of 264.7mw (ISO) and 225mw (net)
capacity. Lastly, there is the Omotosho II Power Plant in Okitipupa, Ondo
State. The four GE Frame 9E Gas Turbines at the heart of this sprawling
facility have the capacity to generate 512.8mw (ISO) and 451mw (net). It is
also an open cycle gas plant built to accommodate future conversion to
combined CCGT conguration.
Investors scramble
With Nigerias population of over 160 million people, the country is
without doubt the largest market for investors in Africa. To be sure, the
meteoric rise of hitherto unknown telecommunications company in
5/27
5/22/2016
global reckoning following their entrance into the highly rewarding

Nigerian telecoms sector has put both indigenous and foreign investors
on the alert for any investment opportunities in Nigeria. It is against this
backdrop that over 200 investors have indicated interests in acquiring
the NDPHC plants.
The investors are seeking to capitalise on the growth opportunities in the
Nigerian electricity market where demand far outstrip current supply and
the potential for strong economic growth is high.
Moreover, some foreign investors are interested in the plants because
they want to establish a strong presence in West Africa, using Nigeria as a
platform for acquiring further assets in the region.
The NDPHC plants are also being sought after since they are all newly
constructed and as such are fuel efcient with low operating costs,
thereby relieving investors of pressure from construction-cumcommissioning costs.
Investors are also expected to benet from a Multi-Year Tariff Order
(MYTO) designed to be a cost-reective tariff that accounts for operating
cost and capital recovery. They would benet from a Power Purchase
Agreements (PPAs) with the Federal Government owned entity the Bulk
Electricity Trading Plc (NBET) which will act as the bulk buyer of
electricity in the early stages of market liberalisation.
Equally, there is the opportunity to benet from the 10-year term Gas
Supply and Aggregation Agreements with Nigerian oil producers.
Recouping costs for NIPP Phase II
At the Hong Kong road-show, Governor Suswam disclosed that the three
tiers of government have, so far, invested well over $8 billion in the
6/27
5/22/2016
building of the 10 power plants on offer for sale. However, the

government expects over $6 billion (about N936 billion) in revenue from
the on-going moves to divest 80 per cent of public sector interests in the
10 new power stations.
The revenue receipt, according to ofcials of the Ministry of Power and
Mr. Olotu, would be ploughed back into the sustained capacity
development in the power sector, specically to build a number of
hydropower dams across Northern Nigeria in line with the aspiration to
drive the countrys economy up to the biggest 20 in the world by the
year 2020.
Also during the road-show, Minister of Power, Prof. Chinedu Nebo,
stressed that the power sector will thrive in the hands of the private
sector and drive the Nigerian economy. We will give maximum support
to investors to take over the sector.
The entire process of privatisation of the power sector is irreversible and
what happened in the telecoms sector is about to repeat itself in the
power sector. We expect that the achievement in the power sector will
dwarf the telecoms sector. We expect this to revive our economy and
revive our SMEs, which are currently moribund.
Speaking in the same vein, Chairman, Presidential Task Force on Power,
Mr. Dagogo Jack, stated: This project is consistent with governments
policy to push the plants to the private sector, which can manage it
better. Government will create incentives for investors in the power
sector.
Also during the road-show, Director-General, BPE, Mr. Benjamin Dikki
said the sale of the power plants fell within the context of President
Jonathans Transformation Agenda, which seeks to create a conducive
7/27
5/22/2016
atmosphere for private capital inows.

7
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Steady power supply: Will privatisation do the magic?

delivered 10 new power generating plants as mandated by the Act.

global reckoning following their entrance into the highly rewarding

building of the 10 power plants on offer for sale. However, the

atmosphere for private capital inows.

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Lets say no! No to domestic violence

Ethnicity in Nigerias governance

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2016 Vanguard Media Limited, Nigeria

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